Casualty And Property Insurance

C is correct. A nonexclusive, or independent, agent represents more than one company. This type of agent collects commissions on the policies sold, but collects no salary from the companies he or she represents.

D is correct. The umpire is selected jointly by the insured and the insurance company and settles the dispute if the appraisers selected by the insured and the insurance company do not agree on the value of the loss.

Answer B is correct. Essentially, a FAIR plan makes insurance available to risks that were previously considered uninsurable because of environmental hazards.

Answer B is correct. Claims paid under general liability coverage are charged against the applicable aggregate policy limits and reduce the amount of insurance remaining to pay future claims during the policy period, but they apply separately to each consecutive policy period and are reinstated on each policy anniversary date.

C is correct. Consideration is the thing of value exchanged under a contract. The insured's consideration is the premium; in return, the insurer promises to pay for certain losses if they occur.

C is correct. The named insured is the person, business, or other entity named in the declarations to whom the policy is issued. First State Bank has an insurable interest as the mortgagee, but is not a named insured.

B is correct. An indirect loss is one that comes as a result, or consequence, of the original loss.

A is correct. This would be considered a collision loss under Part D of the Personal Auto policy because it involves the impact of an auto covered by the policy with another vehicle. Part ALiability coverage would not cover damage to the insured's own car. Part CUninsured Motorists coverage applies only to bodily injury in most states.

D is correct. The Builders Risk coverage form covers the building under construction and its foundation. Fixtures, machinery, equipment used to service the building, and the insured's building materials and supplies can be covered if they will become a permanent part of the building and are located within 100 feet of the building.

A is correct. Theft means the unlawful taking of money, securities, or other property. This broad term includes burglary, safe burglary, and robbery.

B is correct. A sprinkler system can reduce the severity of fires, but it does not prevent them altogether.

A, B, and C are correct. Under Part A, the named insured, his or her spouse, or any family member is insured for the ownership, maintenance, or use of any auto or trailer. A family member is any person related to the named insured who is a resident of the insured's household. An individual who uses a vehicle without permission is not covered under Part A, unless that person is a family member using a covered auto owned by the insured.

Answer C is correct. In addition to collision and other than collision coverage, if a covered loss makes an insured auto unavailable, a personal auto policy will provide coverage for transportation expenses up to $20 per day, subject to a maximum payment of $600.

Answer C is correct. There are two primary CGL coverage forms: the occurrence form and the claims-made form. Although the two forms contain basically the same coverages, exclusions, and conditions, they only differ in how the coverage under the form is activated, or "triggered" for Coverages A and B.

Answer A is correct. Collision is defined as the impact of a covered auto with another object or vehicle. The policy specifically lists contact with a bird or animal as an "other than collision" loss.

Many losses are reimbursed on an actual cash value (ACV) basis. Actual cash value is usually calculated by determining an item's replacement cost and subtracting an amount for depreciation.

C is correct. Concurrent coverage refers to two policies that offer the same coverage against the same perils. Concurrent causation is when two perils contribute to the same loss. Having concurrent coverage is not fraudulent. Double indemnity is a provision of life insurance policies that pays an extra benefit if death results from an accident rather than an illness.

B and C are correct. Choice A is not correct because the auto is owned by a business. Choice D is not correct because a PAP can only insure four-wheel vehicles.

A is correct. Assigned Risk Plans insure motorists with poor driving records who are unacceptable risks for most insurance companies.

D is correct. The insurance company can examine an insured's books and records up to three years after the end of the policy period.

Answer D is correct. The legal definition of "waiver" is the intentional relinquishment of a known right. Sometimes an insurer or its agent might overlook a provision that might have been grounds for denying coverage or increasing the premium. By doing so, the insurer might have relinquished its right to deny coverage or exercise options at a later date by creating a waiver. A representation is a statement believed, but not guaranteed, to be true, whereas a warranty is a statement guaranteed to be true. A unilateral contract is one in which only one party is obligated to perform its part of the agreementfor example, an insurance contract is unilateral because an insured might choose not to enter the agreement by paying the premium, but if the insured pays the premium, the insurance company is obligated to pay for covered losses.

The preservation of property additional coverage under a businessowners policy covers direct physical loss or damage from any cause if the property has been removed to another location in order to protect it from loss by a covered peril. Coverage applies while the property is being moved and while it is temporarily stored at another location, but only for 30 days after the property is first moved.

A is correct. Vicarious liability is liability that a person or business incurs because of the actions of others, such as family members or employees

B is correct. Liability coverage does not pay for property or bodily injury to an insuredone's own property and medical insurance is needed for that

D is correct. The HO-5, the Comprehensive form, provides open peril coverage for dwellings, other structures, and personal property.

Answer A is correct. The special form is the only causes of loss form for commercial property coverage that provides theft coverage. However, for certain classes of property, various limitations apply, and coverage for theft of furs and fur garments is limited to $2,500.

Answer C is correct. Insurance consultants do not actually sell insurance; they sell advice. Agents, brokers, and solicitors are all producers who sell insurance.

Answer A is correct. The value reporting form is an endorsement specifically designed for businesses with fluctuating inventory values because of seasonal variations in business or shifting inventory between different locations. When this coverage applies, the insured must report values periodically, such as monthly, and the actual amount of insurance in effect will be adjusted accordingly. The final premium will be adjusted at the end of the policy year based on average values.

D is correct. All of the described damages are for liability. General damages are a type of compensatory damages in which the injured party is compensated for his or her loss. Punitive damages are awarded over and above compensatory damages as a way of punishing the wrongdoer

D is correct. Personal and advertising injury covers all of the items listed plus false arrest, wrongful eviction, wrongful entry, invasion of the right of private occupancy, and use of another's advertising idea in an advertisement.

C is correct. Competitive states give employers a choice between purchasing workers compensation insurance from a state fund or a private insurance company. The state fund competes with private insurance.

Answer B is correct. If an insured already has physical damage coverage for at least one vehicle under a personal auto policy, a new vehicle will be automatically covered from the date it is acquired as long as the insured notifies the insurer and requests the coverage within 14 days. It doesn't matter if the new auto is a replacement or additional vehicle.

D is correct. The conditions describe the responsibilities and obligations of the insurer and the insured.

B is correct. Choice A is not correct because mechanical breakdown is excluded by the policy. Choice C and Choice D are not correct because they are collision losses.

The retroactive date provides some protection against losses that occurred before the claims-made form was written.

Answer D is correct. Although the PAP excludes liability arising out of operation of a public or livery conveyance, such as a taxi business, an exception is made for share-the-expense car pools that are covered. The other answer choices are specifically excluded.

B is correct. A warranty becomes part of the policy. If it is breached, the insurer can void the policy.

A is correct. One breakdown means that if an initial breakdown causes other breakdowns, all are considered a single breakdown. All breakdowns at any one premises that manifest themselves at the same time and are the direct result of the same cause are considered "one breakdown."

Standard homeowners insurance policies generally exclude coverage for earthquakes. Earthquake coverage is usually purchased separately as an endorsement or through a specialized earthquake insurance policy. This is because earthquakes are considered catastrophic events with the potential for widespread damage, making them a high risk for insurers.

A is correct. The Assignment condition specifies that a policy cannot be transferred to anyone else without the written consent of the insurer, except in the event of the death of the named insured.

B is correct. Because total coverage is $300,000 and policy C provides 50% of this amount ($150,000) it is obligated to pay 50% of the loss.

A is correct. Credit cards, motor vehicles and their equipment, and property owned by boarders or roomers are all excluded under the Broad Theft Coverage endorsement. However, up to $2,000 of coverage is available to cover theft of firearms.

B is correct. The federal government created the NFIP to make Flood insurance available to eligible communities through federal subsidization. It is managed by the Federal Insurance Administration.

A is correct. Fire department service charges are paid in addition to the limit of insurance, with no deductible.

Generally, four-wheel private passenger autos, pickups, and vans owned by an individual or married couple are eligible if used for pleasure or general transportation. Pickups and vans used in a business, other than farming or ranching, are not eligible.

Damage to a covered auto while being used as part of a car pool is not excluded. All of the other answer choices are specifically excluded.

C is correct. In a mutual company, insureds are also owners of the company. They can vote to elect the management of the company. Profits are returned to insureds in the form of dividends or reductions in future premiums.

Adverse selection means the tendency of people with a greater than average exposure to loss to purchase insurance coverage. For example, if insurers only sold earthquake coverage to applicants in earthquake-prone areas, or flood insurance only to those in flood-prone areas, the situation known as adverse selection would exist. Insurers and underwriters guard against adverse selection by trying to sell broad ranges of coverages to a large cross-section of the population in order to increase the premium base and spread the risk of loss.

D is correct. The only perils that are automatically covered under the Basic form are fire, lightning, and internal explosion.

Answer B is correct. An aggregate limit is a maximum limit that applies to all losses during a policy period. Each individual loss is subtracted from the aggregate limit and reduces the remaining coverage. At each policy anniversary or renewal, the aggregate limit is reinstated in full.

Answer A is correct. Mobile homes may be covered only when the Mobile Home endorsement is attached. All of the other answer choices are included in every homeowners policy.

A is correct. By not carrying health insurance, Donna is retaining the risk of financial loss from unexpected medical expenses.

If a dwelling policy includes the extended coverage (EC) perils, coverage for vandalism and malicious mischief (V&MM) may also be added. However, this coverage will not apply whenever the building has been vacant for more than 30 consecutive days.

B is correct. If no loss occurs, the insured will receive no benefits although he or she paid premiums, but if a large loss occurs, the insured might receive benefits that far exceed the premium payments.

D is correct. In this case, both parties contributed to the accidentBen by driving too fast and Reba by illegally parking her car. In the other examples, the injured party's own negligence did not contribute to the loss.

B and C are correct. Under the Common Policy Conditions, certain responsibilities and obligations are assigned to the first named insured. One of these is cancellation of the policy. The insurance company may also cancel the policy under certain circumstances.

A is correct. The standard deductible is $500.

C is correct. The Basic and Broad Causes of Loss forms are named peril forms.

All of the options mentioned in the question are excluded under Coverage A of the CGL. Coverage A provides protection for bodily injury and property damage claims that the insured becomes legally obligated to pay as a result of their business operations. However, intentional damage caused by the insured, pollution losses caused by the insured, and liquor liability for those in the business of serving liquor are all specifically excluded from this coverage. Therefore, none of these situations would be covered under Coverage A of the CGL policy.

Answer C is correct. For certain hard-to-value items, the insurance company may issue a valued or agreed amount contract for a specified amount agreed to by both parties. If the item is lost or completely destroyed, the insurer will pay this amount as settlement.

Answer C is correct. The conditions state the ground rules for the contract and spell out the responsibilities and obligations of both the insurance company and insured.

Answer C is correct. As part of the additional liability coverages, a homeowners policy will reimburse an insured for reasonable expenses incurred at the company's request, including loss of earnings of up to $250 a day.

Answer A is correct. Some policies cover an insured's exposure for "personal injury," which means liability for such things as slander, libel, false arrest, and invasion of privacy. In the insurance business "bodily injury" and "personal injury" have different meanings and are not used interchangeably. The term "bodily injury" is limited to physical injury.

D is correct. The four requirements for forming a valid contract are competent parties, a legal purpose, offer and acceptance, and consideration. Oral contracts are valid. Contracts do not have to be written or include signatures (although it is a good idea to do so).

A is correct. The specific provisions of the written agency contract constitute the authority expressly given to the agent by the insurer.

B is correct. A detached garage that is used for commercial, manufacturing, or farming purposes is not covered under a Dwelling policy.

B is correct. Part ALiability coverage covers damages for bodily injury or property damage that an insured becomes legally responsible for because of an auto accident. Injuries to the named insured or his or her family members would be covered under Part BMedical Payments coverage. Loss of personal property of an insured is not a matter of legal liability, and is not covered.

C is correct. Optional coverages are usually preprinted in the policy, but apply only if they are designated in the declarations. Losses involving an object during testing are specifically excluded.

A is correct. The policy will pay up to $10,000 for pollutant cleanup and removal if the pollution was caused by a covered peril.

A, B, and C are correct. Workers compensation laws pay benefits in four categories: disability/loss of income benefits, medical benefits, survivor/death benefits, and rehabilitation benefits. They do not pay benefits for pain and suffering.

A is correct. Deductibles apply separately for each applicable coverage unless the deductibles are shown as "combined" for any two or more coverages. Depending on the coverage, the deductible might be expressed as a dollar amount, a time limit, a percentage of loss, or a multiple of daily value.

Answer A is correct. In addition to the major coverages written, if personal property coverage is included, a dwelling policy will provide up to 10% of the Coverage C limit for personal property located anywhere in the world. This would include such things as clothing, personal effects, cameras, and luggage taken on vacation.

The term "time element coverage" is used for many indirect losses, such as a business income loss, because the amount of loss might not be directly related to the amount of property damage that occurred, yet it is related to the time it takes to repair, rebuild, or restore the damaged property. Many factors can influence the ultimate loss, including the availability of supplies and replacement parts.

Almost any building that is walled and roofed, is principally above ground, and is fixed to a permanent site is eligible to be covered by a flood policy. A policy may cover a building, its contents, or both.

B is correct. Coverage for collapse is provided by the Broad and Special forms, but not by the Basic form.

A is correct. When a CPP is cancelled by the insurer for nonpayment of premium, it is required to give notice at least 10 days in advance. In all other cases of permitted cancellation by the insurer, it must give notice at least 30 days in advance.

D is correct. The first three choices are excluded, but animals are not excluded if they are boarded or held for sale.

A, C, and D are correct. The Garage coverage form is designed to cover automobile-type businesses, such as car dealerships, gas stations, and parking garages. These types of businesses cannot be covered under the Business Auto coverage form.

B is correct. Business Auto Physical Damage covers losses to the insured's own vehicles, not losses to other's vehicles the insured might become liable for.

Answer B is correct. Coverage for towing and labor costs will cover labor only if it is performed at the place of disablement. Although the towing charge may be covered if the vehicle is taken to a garage, any work performed after the vehicle is taken to a garage is not covered.

C is correct. An agent or an insurance company can issue a binder. A binder does not guarantee that a policy will be issued; it only guarantees temporary coverage. If the company decides to not issue the policy, coverage under the binder may be cancelled by a formal cancellation notice; however, if no formal cancellation is made, coverage remains in effect until the binder expires. If a policy is issued, coverage under the binder ceases as of the effective date of the policy.

A, B, and D are correct. The Common Policy Declarations contains information about who is insured, when he or she is insured, and for what lines he or she is insured. It includes the name and mailing address of the named insured, the policy period, and a summary of the premiums charged. Loss conditions are described in the policy form, not the declarations.

D is correct. Office buildings that are no more than six stories high and contain no more than 100,000 square feet are eligible for the BOP.

B is correct. The Business and Personal Property coverage form will only pay up to $2,500 in any one policy year for losses to electronic data.

This form covers medical and dental instruments on and off the premises, furniture and fixtures at the office, and the insured's interest in improvements and betterments. Radium is not covered.

C is correct. The insurer can immediately suspend coverage whenever covered equipment is found to be in or exposed to a dangerous condition. Suspension applies only to that particular object and takes effect as soon as written notice is delivered to the insured.

Answer B is correct. A tort is a civil wrong that violates the rights of another. Unlike the commission of a crime, in which the government may prosecute the wrongdoer, torts are a part of civil law that is concerned with private relationships between people.

Answer A is correct. Annual transit policies, trip transit policies, and motor truck cargo policies are all examples of nonfiled inland marine forms used to cover domestic shipments. Although some types of property may be covered in transit by the mail coverage form, it is a filed form that is part of the ISO package policy program.

A is correct. This is the oldest form of rating. The premium is determined by considering the individual risk. No books or tables are used; premiums are established through careful judgment.

B is correct. Proximate cause is one of the elements required to establish a charge of negligence. It is an action that, in a natural and continuous sequence, produces a loss.

B is correct. Absolute liability is imposed by law on those participating in certain activities that are considered to be especially hazardous. Individuals involved in such operations can be held liable for the damages of another even though the individual was not negligent.

A is correct. The Watercraft Liability endorsement covers watercraft up to 26 feet long powered by outboard engines exceeding 25 horsepower, inboard-powered watercraft, or sailboats more than 26 feet long.

Answer A is correct. Binders can be issued in writing, but oral binders are valid if the agent is acting within the scope of his or her authority. Binders are temporary contracts of insurance and can be given by agents or insurers.

Answer C is correct. The basic and broad dwelling forms provide coverage on a named peril basis. The special form provides open peril coverage.